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MemoWatch EDS yesterday presented its version of what went wrong with last year's Inland Revenue tax credits fiasco, in a memo to UK staff.

EDS was responsible for the systems to administer tax credits. The software went live after four weeks of tests, although a 20-week test period was originally specified. Hundreds of thousands of low-paid workers and their families suffered short-term hardship when their payments failed to arrive as expected - and needed. EDS was paid £168m for the project.

But according to Bill Thomas, EMEA boss, media coverage of the company's account of the reasons for the botched installation to the Public Accounts Committee "over-accentuated the negative rather than reporting the facts that we shared with the Committee".

So let's redress the balance by publishing Mr Thomas' memo to staff in full.

MEMORANDUM

From: Bill Thomas, president EMEA
To: All colleagues in the UK
Date:9 December 2003
Subject: EDS’ appearance in front of the House of Commons Public Accounts Committee

Some of you may have noticed media coverage of the evidence that we gave together with the Inland Revenue to the House of Commons, Public Accounts Committee on 3 December. As is sometimes the case with media coverage, it over-accentuated the negative rather than reporting the facts that we shared with the Committee. So that you have a clear understanding of the evidence we gave to the Committee, and its background, I would be grateful if you would take a minute to read the following.

I have publicly taken responsibility for the IT failure that occurred when an under-tested software release went live in April this year, and I restated that point, with my regrets, to the Committee. The worst aspect of the failure is that it impacted people: people who expected to receive payments and related information, but didn't; the Inland Revenue's own front line staff - and closest to home, the joint project team. Our EDS colleagues at Inland Revenue worked long hours for an extended period to mitigate the impacts of programme problems outside their control.

At the Committee meeting, Craig Wilson, client executive for our IR business, and I appeared as witnesses. At the meeting the underlying causes
of the pressure we were under were exposed. I do not believe any other company or project team could have coped better with the pressure on this programme: much of our testing window was lost as a consequence of the late issue of business requirements, and the need to resolve a huge data corruption problem unfortunately caused by incorrect usage of a related system by our customer.

Our colleagues put in a huge effort to recover the situation for our customer. Faced with the difficult decision of either going live with a system that had no evident defects after this limited test programme, or delaying the switch-on of this service so critical to the Government, we chose the former. The complexity of latent defects in the system was far greater than anyone could have expected - and the consequences to all were most severe.

For the people benefiting from the Tax Credits Programme it is of little comfort that we fixed the system, flying in EDS and technology partners to help, in the same time originally planned for testing. However, this was a remarkable achievement: not only was the fix performed in a live environment, but the user workload in that environment was much higher than we expected as a consequence of the backlog created by the data corruption problem.

I made the Committee aware that our team have now delivered the next release in the Tax Credits Programme, as challenging as the release that went live in April this year. We expect to deliver further releases to schedule next year - the next involves 250 man-years of effort.

In conclusion I would like to thank the tax credits team and the wider EDS Inland Revenue team for their efforts and achievements during an incredibly difficult period. They have delivered a monumental change programme for the country and they can be proud of that.

Thank you.

Bill Thomas

EDS is lobbying hard to retain a contract, worth £4bn-£5bn, to manage the Inland Revenue's tax and national insurance systems. Last week, the board of the Inland Revenue recommended that the computer services giant should be ditched in favour of Cap Gemini, according to the FT. The decision lies in the hands of the Treasury. ®

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